TV Now, copyright later: why the Federal Court found for Optus

by Mary Still, Nicole Landerer

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The issue of copyright in broadcasts is again in the headlines, with the recent decision over Optus' TV Now service (Singtel Optus Pty Ltd v National Rugby League Investments Pty Ltd (No 2) [2012] FCA 34).

What was the dispute over Optus' TV Now all about?

The Australian Football League and National Rugby League partnership own the copyright in broadcasts made on free to air television of games played between teams in their respective competitions. Telstra has an exclusive licence from the AFL and NRL to exploit free to air broadcasts of live and pre-recorded AFL and NRL games on the internet and mobile telephony.

In mid-July 2011, Optus began a new service called TV Now. Optus' TV Now service enables its customers (who are private as well as business customers) to record free to air TV programs, including AFL and NRL games, (the recordings are stored on Optus' cloud storage platform) and, at a later time, stream the recorded programs to their devices for viewing on any one of four compatible devices: PCs, Apple devices, Android devices and 3G devices.

Telstra and the sports organisations argued that Optus infringed their copyright by making unauthorised recordings of their sports broadcasts and then made unauthorised communications of these recording to their customers. Optus contended that it was their users (not Optus) that made the recordings, and that playback of these broadcasts did not infringe copyright because they fell within the section 111 of Copyright Act 1968(Cth) exception for recording broadcasts for private or domestic use.

Question 1: When the user clicked the "record" button on his compatible device, did Optus or the user make the recordings of the broadcast?

Justice Rares found that when the user clicked the "record" button, the user alone did the acts involved in recording the copyright works on Optus' equipment. He found that the TV Now service is "substantially no different from a VCR or DVR", and while Optus provided all the significant technology for making, keeping and playing the recording, this was no different to a person using equipment in his/her home or elsewhere to record a broadcast.

He supported his decision by pointing to appeal courts in the United States and Singapore that had reached similar results, and by drawing an analogy to the High Court decision in University of New South Wales v Moorhouse[1975] HCA 26 where Justice Gibbs suggested that it was "impossible to hold" that the University did the act of photocopying when the student copied part of a book in its library.

Question 2: If the user made the recordings, was recording the films an infringement of copyright?

Here Justice Rares found that the user did not infringe copyright in any of the works because he or she made the recordings of those broadcasts to time-shift them solely for private and domestic use, within the meaning of sections 111(1) and (2) of the Act.

He could not find any evidence to suggest that any user had a purpose other than that of wanting to watch that game for his/her own private and domestic use and pleasure. Further, users had agreed with the terms and conditions of the TV Now service that stipulated that the service was for the user's "individual and personal use", limiting the use of the service to a non-infringing use that complied with the purposes set out in s 111(1). Justice Rares suggested that the recordings were made by the user to watch at a time he considered to be more convenient than when the live broadcasts occurred, even if only by minutes.

The rightholders argued that the use by small to medium businesses was outside the scope of the purpose in section 111(1) because such a business could not have a private or domestic use for such films. In response, Justice Rares suggested that even though small to medium business subscribers could sign on for the TV Now service, as a matter of practicality, the only persons who could obtain access to the service would be employees of, or individuals involved in, the businesses. Since a corporation cannot look at the film or operate the mobile device/PC, whoever signed up for the service must have been an individual, and it is that person's use, not the corporation's or business', that is relevant for the purposes of section 111(1).

Question 3: When the user clicked the "play" button to view a recording, did Optus or the user cause one or more different infringements of the rightholders' copyright to occur when the recording was streamed to the user's compatible device in the appropriate format?

Justice Rares held that the user of the TV Now service, not Optus, was responsible for electronically transmitting, or making available online, the recording he had recorded since when the user clicked the "play" button to watch the recorded film, he caused it to be streamed to his compatible device.

The rightholders, relying on the reasoning in Telstra Corporation Ltd v Australasian Performing Right Association Ltd [1997] HCA 41, argued that any communications were "to the public" within the meaning of sections 86(c) and 87(c) of the Act. Justice Rares rejected this argument, suggesting that the impact of a user communicating the recording or film to his compatible device lacks the element of commercial detriment to the rightholders that Telstra's customers caused by contracting for the music on hold to be played.

Justice Rares found that no communication "to the public" can occur if the user made the recording he communicates by clicking the "play" button, "solely for private and domestic use by watching or listening to the material broadcast at a time more convenient than the time when the broadcast is made" within the meaning of s 111. The recording is a communication that can only be made by the person who made the recording or others invited by him to watch it. He found that the fact that the user may be with one or more persons when watching (usually family or friends), does not convert its private and domestic nature to being that of a communication "to the public".

Conclusion

Ultimately, Justice Rares found that Optus' TV Now service did not infringe copyright in the broadcasts of the AFL and NRL games in the particular ways the rightholders alleged. Some other issues still need to be resolved, such as, technical issues in relation to Optus' technology for Apple devices.

Proceedings are adjourned so that the parties can agree on the formal orders that need to be made to reflect the Court's decision. Leave has already been granted for Telstra and the sports organisations to appeal to the Full Federal Court.

Clearly, if this decision is upheld on appeal, the value of internet and mobile telephony rights will be seriously jeopardised.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.